Dell is biggest loser in Oracle deal for Sun

Oracle (ORCL) is in the server business now. So is IBM (IBM), Cisco (CSCO), and Hewlett-Packard (HPQ). But these four companies are fairly evenly matched. HP has annual revenue of over $100 billion. So does IBM. Oracle's is less at $22 billion, but it has one of the highest operating margins in the software industry. Cisco's operating margins are nearly as good. And, all four have market caps in the $85 billion to $135 billion range. They all also have highly diversified businesses.

The one other large company in the server business, Dell (DELL), has almost none of the advantages of the rest. Its market cap is only $20 billion, a sign that the market does not like its prospects.

Dell had revenue of $61 billion last year, but tiny margins. Its operating income for the period was only $3.2 billion. Dell does have scale in the PC business. It is the No. 2 PC manufacturer in the world. Dell falls behind HP and IBM in global server market share, and just ahead of Sun (JAVA). With Oracle's financial and marketing services, Sun has a good chance to step that share up after it becomes part of the larger enterprise software company.

Dell also lacks the diversification that the other companies have. In its last fiscal year, only 9 percent of its revenue came from IT services, a core part of the revenue of its rivals.

There is only one big loser coming out of the announcement of the Oracle-Sun merger -- Dell.